Areva - Reference Document 2016

04

RISK FACTORS

4.6 Risk related to major projects

4.5.6. SUPPLIER CONCENTRATION IN THE PROCUREMENT CHAIN

A decrease in the supply of certain strategic components or an increase in the cost of electricity could have a negative impact on the group’s production costs. The group’s operations require large supplies of specific commodities and semi- finished products, including base products, zircon ore and others. Some operations also use large quantities of electricity.

The group’s large requirement for commodities and semi-finished products is such that the group could experience procurement difficulties, given the limited number of suppliers. For all of these operations, a shortage of commodities or semi-finished products could translate into a production slowdown or even, in certain circumstances, in shutdown.

4.5.7. RISKS RELATED TO ANOMALIES DETECTED IN THE FRAMEWORK OF QUALITY AUDITS OF NUCLEAR COMPONENT MANUFACTURING

As explained in Section 9.1. Overview , AREVA initiated a quality audit in late 2015 of nuclear components manufactured at the Creusot plant. The first phase of the Creusot audit revealed anomalies in some manufacturing files of equipment for nuclear reactors. AREVA expanded the audit to the Chalon-Saint Marcel and Jeumont equipment manufacturing plants. As of this date, those audits have not led to a finding of any deviation such as those found at the Creusot site, and were still in progress as of the date of this document.

Unsatisfactory findings following the quality audits conducted in the Creusot, Chalon- Saint Marcel and Jeumont plants could, as indicated in Section 9.1 Overview , compromise or delay the execution of the sale of AREVA NP’s operations to EDF and have a significant unfavorable impact on the group’s financial position and operations.

4.5.8. RISKS RELATED TO IMPLEMENTATION OF THE PERFORMANCE PLAN

As explained in Section 9.1. Overview , AREVA announced on March 4, 2015 the deployment of a performance plan to achieve 1 billion euros in operational gains in 2018 compared with 2014. This plan rests on four pillars in particular: control of payroll and compensation, productivity improvement, selectivity in purchasing, and marketing and sales strategy.

While the group is working on the successful implementation of the performance plan, no guarantees can be given as to the performance plan’s achievement of the contemplated gains and cost reductions within the expected period of time. If the group were not to achieve the objectives of the performance plan on time, or if it were not to reach these objectives within the expected period of time indicated, that could have a significant unfavorable impact on the group’s operations and financial position.

4.6.

RISK RELATED TO MAJOR PROJECTS

Generally, revenue, cash flow and profitability recognized for a project may vary significantly as a function of the percentage of completion of the project involved. Furthermore, theymay depend on a certain number of items such as the occurrence of unforeseen technical problems inherent in the complexity of the projects and/or relative to the equipment supplied; loss of skills or questions about technologies; and postponements or delays in contract execution. They may also be the financial difficulties of the group’s customers; payments withheld by the group’s customers;

the default or financial difficulties of AREVA’s suppliers, subcontractors or partners in a consortiumwith which AREVA is jointly responsible; and additional unforeseen costs resulting from project modifications or changes in legislation. The profit margins on some of AREVA’s contracts may prove to be very different from those initially anticipated insofar as costs and productivity may vary significantly during contract execution.

30

2016 AREVA REFERENCE DOCUMENT